Digital payments have picked up pace in India during the last few years, it especially gained more traction within the last 2 years during the pandemic as people became more cash averse and switched to digital payment modes using a digital payment gateway to avoid contact due to a risk of infection.
Today, digital payments are tipped to touch $1 trillion by the year 2026 with UPI forming the bulk of all digital transactions. The total value of UPI transactions stood at $300 billion in 2021, and it formed 60% of all online transactions.
The steep drop in internet data rates, coupled with the high penetration of mobile phones across the country has helped millions of Indians access digital payment modes. Technologies like digital wallets and UPI further helped strengthen the digital payments infrastructure in a country where only a small percentage of the country’s population has access to credit cards.
Now that we have had a brief look at the digital infrastructure of India, let’s look at how India is surpassing the rest of the world in digital payments.
United Payments Interface
Popularly known as UPI, this unique payment system is one of a kind in the world. It is unlike any other payment system as it works across all banks, digital wallets, etc. making seamless transactions possible across every network.
India is the only country in the world to have successfully implemented a unified payments system and has set an example in front of the world. UPI’s popularity is evident from the fact that many other countries including countries like Japan and many others are exploring the possibility of implementing UPI in their own countries.
e-RUPI
To enable people with no smartphones to become a part of the digital ecosystem, the government is working on a unique piece of technology known as e-RUPI. Unlike most other payment systems that require an active internet connection to work; e-RUPI is a voucher-based payments technique where users receive an SMS or a QR code on their phones.
This voucher is prepaid and can be redeemed by the user at outlets where it’s an accepted payment method. This neat piece of technology will enable every Indian to embrace cashless payments and help the country move towards a completely cash-free system soon.
Digital Wallets
India is perhaps one of the few developing nations which have witnessed explosive growth in the number of digital wallet apps. Over the years, it has become arguably the favorite method of paying for goods and services such as groceries, medicines, and other essentials. Up until last year, mobile wallets saw transactions upwards of ₹1.5 trillion which indicates that India and Indians are increasingly using digital wallets as opposed to cash for making everyday transactions.
Increased Number of Debit Cards Users
The Jan Dhan bank account scheme which was launched by the government of India enabled people with no access to banking services to get their bank accounts and debit cards. As a result, the number of debit card users in the country grew, and by December 2021, the number of ATM transactions stood well over 590 million, with close to 358 million POS transactions across the country.
Digital Loans and Bank Accounts
India has one of the largest startup communities in the world, and this community has spawned several fintech and digital banks. These app-based digital platforms are enabling easy access to loans and credit cards. Moreover, digital banks such as Jupiter and FI, etc. have made it easier than ever to open a bank account with just a few clicks, giving the larger population access to banking and digital payments even if they live in the remotest areas of the country lacking financial institutions.
India as a country has come of age in terms of developing a solid digital payment provider by giving everyone access to 3 of the most important things that are essential for building a cashless society.
- Access to a Bank Account
- Access to Digital Payment Modes
- Access to Seamless transactions
Because India is home to the second-largest population on the face of the planet, this by far is no short feat. Consider this, even developed nations like the United States still haven’t been able to implement anything like a UPI.
India has set an example in front of the world by seamlessly integrating online payments to work across every network imaginable. And with the introduction of e-RUPI, digital payments would soon reach even people with a basic feature phone with no access to the internet. This is something that couldn’t have been imagined a few decades back.
India is currently leading by example as to how to bring everyone under the digital payments umbrella regardless of their social strata, area of residence, and internet connectivity.
All of this will help the country ensure that the majority of the transactions that place, do so in a digital format, unlike the yesteryears when having physical currency in your pocket was a necessity if anyone wanted to pay for goods and services.